At 31 December 2018, the assets of the Brentwood Industries battery cash-generating unit are shown as follows (in millions) on the company's balance sheet:

	Cost	Accumulated Depreciation*	Net Book Value
Goodwill	$1,030	$ 0	$1,030
Building (40 year life)	5,300	1,560	3,740
Equipment (15 year life)	3,450	2,070	1,380
Development Costs (12 years)	600	200	400
	$10,380	$3,830	$6,550

*depreciation for 2018 has already been recorded

The building has an estimated residual value of $100 million. A downturn in the demand triggered an impairment test be completed. The impairment test revealed that the fair value less costs to sell of the cash-generating unit is $4,600 million. However, the building was assessed at having an individual fair value less cost to sell of $3,500 million.

Required:

a) Prepare an adjusting journal entry to record the impairment on December 31, 2018. (7 marks)

Optional Worksheet

Calculations

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b) During the following year, demand for Brentwoods battery products picked up, so that by December 31, 2019 the fair values for this cash-generating unit were now assessed specifically for each asset as follows: Building $3,600 million,Equipment $1,200 million and Development Costs $300 million for a total of $5,100 million.

Calculate the amount of impairment reversal attributed to the equipment (3 marks)

Calculations:

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